Discussing the outlook for 2011 at the Live Q&A

Preparing for the broadcast

Focussing on our East Capital Universe throughout the conversation, Marcus highlighted how the Baltics have emerged strongly from the financial crisis. We all recognise that this has not been an easy ride - the suffering that these countries have endured over the past few years, combined with the structural reform that has taken place, has increased the appetite for the region. The re-election of the Latvian government and its promise for more cuts in order to align itself with Estonia into the Eurozone bodes well. That said, we hope to see more development within the domestic markets, particularly the stock market and significant pension reform. Privatisation of large firms within energy and telecommunications would further increase international interest.

Looking forward on the Turkish market, in spite of strong growth in 2010- 2011, we think that the Turkish market may not perform as well as in 2009 and 2010, mainly due to lack of earnings growth on top of two extraordinarily strong years. Inflation has been an issue in the past and inflation targets are rarely met in Turkey, but the overly ambitious inflation target could be seen as a policy anchor. Inflation has been coming down to more normal levels lately and should stay deep in single digits albeit higher than the 5.3% target in 2011."

As a key component to the East Capital Universe and home to our best performing fund, we continue to focus on the exciting prospects for Russia as its outlook remains strong, with large American multinational companies such as Pepsi committing considerable amounts of money to the country. It is the rise of the middle-class and the consumption play in Russia that has sparked this interest. With more people getting access to consumer credits, following the lower interest rates, both the retail and construction markets are likely to feel the impact, and this is the basis for much investor excitement when it comes to the region.

The next Q&A will take place in February, and we welcome any questions from the public to ensure our experts cover those topics most important to you.

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